Supreme Court Could Limit Discrimination Claims in Fair Housing Case

People sing “We Shall Overcome” at the conclusion of the King Center’s 47th annual Martin Luther King Jr. Commemorative Service in Atlanta, Jan. 19, 2015. Reuters/ Christopher Aluka Berry

In the days after the assassination of Martin Luther King Jr., Congress moved quickly to pass a civil rights law that prohibits housing discrimination, the Fair Housing Act of 1968. On Wednesday, days after the commemoration of King’s birthday, the Supreme Court considers arguments about the scope of that law, in a case that has rallied mortgage lenders, insurers and real estate developers on one side, and civil rights advocates and dozens of cities and states on the other.

The justices will weigh whether the Fair Housing Act bars only intentional discrimination, or whether discriminatory effects, regardless of intent, are illegal, too. The court’s ruling could upend four decades of precedent in the lower courts, and deal a major blow to fair housing advocates, who argue that policies that seem neutral continue to harm protected groups.

“Housing lies at the fulcrum of civil rights,” said John Relman, an attorney for the National Fair Housing Alliance. “Where you live affects the opportunities that you have for jobs, for better schools, for connections that allow you to have opportunity in your life.”

The case, Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, marks the third since 2011 that the Supreme Court has agreed to examine the issue of discriminatory effects — or, “disparate impact” — in the context of the Fair Housing Act. Two other cases were settled before they reached the justices. The high court’s continued interest in the issue has civil rights advocates worried, since 11 circuit courts have already upheld plaintiffs’ right to sue over disparate impact.

The National Fair Housing Alliance catalogued 27,352 housing discrimination complaints nationwide in its most recent annual report, though the organization estimates that 4 million violations occur each year.

Intentional discrimination can be difficult to prove, housing attorneys say, because “smoking guns” are less prevalent today than 50 years ago. The disparate standard, however, has been used to challenge zoning ordinances that block multi-family housing units, as well as policies that might exclude domestic violence victims from apartment complexes. The Obama administration has employed the disparate impact theory to settle fair-lending cases with major banks, including a $335 million settlement with Countrywide in 2013.

That same year, the Department of Housing and Urban Development issued its first rule on how to analyze disparate impact claims.

“Without question the court is poised to do damage to a key means of vindicating claims under the Fair Housing Act,” said Sherrilyn Ifill, president and director-counsel of the NAACP Legal Defense and Educational Fund.

The Texas Department of Housing and Community Affairs disagrees. In a brief to the court signed by the state’s attorney general, Texas argues that the text of the law “unambiguously requires intentional discrimination,” and that a disparate impact standard “sweeps in defendants who are entirely blameless.”

The case arises out of Dallas, and centers on the state’s allocation of tax credits to build affordable housing units. The Inclusive Communities Project, which advocates for integrated neighborhoods, has criticized the state’s approach as limiting low-income black families from being able to move to areas with better opportunities. The group sued the Texas Department of Housing and Community Affairs (TDHCA), arguing that the state disproportionately slated affordable housing units for minority neighborhoods, and disproportionately denied tax credits for units in predominantly white neighborhoods.